Question by Nightflyer: Refinancing mortgage, closing costs, points??
If you have a 5.875% adjustable rate and know it will surely go up next year, should you refinance now at 5.75% fixed with 1 point + closing cost? 50,000 loan.
I plan to stay here at least 10 years.
Answer by upstatecamp
Thats not a bad proposition, but you should consider finding a loan with no points. That may have an interest rate slightly higher, but the point is a sunk cost. If the loan with no points is 1/8 percent higher interest rate, you will be ahead of the game on a cash flow basis for the next 8 years. And if you decide to move in that time, you will have saved money.
What do you think? Answer below!
Be careful about your refinance. How long have you had your loan? It appears as if you have had it more than 2 years by your statement that it will go up next year.
The reason for the question is because you have to be sure the prepayment penalty is over.
I would agree that the 1 point. Closing cost will always be there. You must pay for title insurance, escrow closing and a few other things.
If you have not contact a mortgage broker, complete an application, have a credit check ran and see what your credit score is. Once the credit report has been ran and you know your credit score, have the mortgage broker make a Good Faith Estimate (GFE). Your interest rate and loan program will be determined by your credit score.
This document will indicate the closing cost,any other points and fees that you will be charged.
Remember that most points and fees are tax deductible. Check with your tax consultants.
I hope this has been of some use to you, good luck.
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